Water Activity Enterprises
| Publication year | 1993 |
| Pages | 2555 |
| Citation | Vol. 22 No. 12 Pg. 2555 |
1993, December, Pg. 2555. Water Activity Enterprises
Colorado has relied heavily on municipalities and single-purpose quasi-municipal districts to provide water and sewer services to citizens and businesses of the state. The capital, operations and maintenance investments necessary to create and sustain the required systems have always involved long-term planning, considerable financial resources and multi-year contracts.(fn1) The passage of Amendment 1, the "Taxpayer's Bill of Rights" ("TABOR"),(fn2) by Colorado voters in 1992 resulted in the Colorado General Assembly enacting Senate Bill ("S.B.") 93-130 to provide for the establishment of water activity enterprises under TABOR's enterprise exception.(fn3)
This article discusses S.B. 93-130, which provides for the conduct of local government water activities under the TABOR Amendment to the Colorado Constitution.
TABOR mandates taxing, revenue, spending and multi-year debt limitations which are applicable to state and local governments, including water conservancy districts, water conservation districts, water and sanitation districts, towns, cities and counties. Such Colorado governmental entities are defined by TABOR as "districts,"(fn4) except when operating in their enterprise capacity.
After November 4, 1993, districts are subject to a ban on any "new tax, tax rate increase, or mill levy above that for the prior year," unless the district's electorate approves it.(fn5) Except for refinancing bonded debt at a lower interest rate or adding employees to a pension plan, voter approval also must be obtained for creation of any multiple-fiscal-year debt or financial obligation, unless adequate present cash reserves are available and pledged irrevocably to make all future payments.(fn6) Fiscal year spending and tax revenue increases above the prior year are capped by a factor of inflation, local growth and other prescribed adjustments.(fn7)
Passage of Amendment 1 required the state, municipalities and single-purpose districts to analyze and adjust their activities to TABOR. An immediate question was whether water and sewer activities of local government entities qualify for exclusion under TABOR's "enterprise" exception,(fn8) which provides that an enterprise is a
government-owned business authorized to issue its own revenue bonds and receiving under 10% of annual revenues in grants from all Colorado state and local governments combined.(fn9)
TABOR does not define the operative terms "government-owned business" and "grant." Thus, entities with water and sewer responsibilities were presented with three alternatives regarding the scope of the enterprise exception: (1) request the governor or General Assembly to submit interrogatories to the Colorado Supreme Court; (2) seek statutory definition; or (3) proceed with ad hoc interpretation of TABOR and await case-by-case decision-making.
Governor Romer's interrogatories to the Colorado Supreme Court, which included an enterprise question, were declined. S.B. 93-130, which spelled out the enterprise with regard to water activities, was then introduced and passed.
The impetus for this legislation derived from the efforts of northern Colorado communities, including Broomfield, Superior, Erie, Longmont, Fort Lupton, Hudson and Fort Morgan, to participate in the planning and construction of a Northern Colorado Water Conservancy District water supply pipeline from Carter Lake to these and other municipal and industrial users. The Northern District's pipeline was conceived as a project separate and distinct from the District's Colorado-Big Thompson Project and its Municipal Subdistrict's Windy Gap Project. Broomfield's participation in the pipeline project stemmed from the federal remediation program for protection
of water supplies down-gradient of the Rocky Flats nuclear weapons plant. Communities such as Hudson and Fort Lupton were committed to the pipeline in light of Safe Drinking Water Act enforcement orders and schedules under regulations of the Colorado Department of Health and the U.S. Environmental Protection Agency. The pipeline project would involve multi-year design and construction contracts, along with revenue bond issuance, loan agreements and greatly increased fiscal-year spending for a number of years.
As a result of testimony by cities and single-purpose districts about their present and projected water activities, the General Assembly...
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